“We are taking these allegations extremely seriously, particularly in light of the chancellor’s insistence that teachers take care to protect Middle Eastern children from any bias,” said Levy spokeswoman Catie Marshall.

Marshall said Levy is so disturbed that he said, “I could give you a quote, but you wouldn’t be able to print it.”

But Schwartz, a teacher at PS 102, insisted she did nothing wrong, and charged she has become a “sacrificial lamb” for anti-Jewish parents.

“I’m a religious Jew, and I’m entitled to work for the Board of Education. The school is tiptoeing around anti-Semitic acts,” the Orthodox woman said.

PS 102, in the Bay Ridge section of Brooklyn, has a sizable population of Arab, Russian and Chinese immigrant students.

Arab parents said Schwartz crossed the line by talking about the politics of the Middle East after the World Trade Center attack.

“Mrs. Schwartz told our kids she went to Israel and that Palestinian children threw rocks at her,” said Mahasin Khalil, whose son is in Schwartz’s class.

Khalil, who filed one of the complaints against Schwartz, also said the teacher unfairly blamed Muslims for the attacks on the Twin Towers.

Khalil is Palestinian, and she said nearly half her son’s class consists of Arab students.

“Mrs. Schwartz wasn’t objective. She shouldn’t be talking to 7-year-olds that way. It makes Arabic students feel something is wrong with them,” Khalil said.

For her part, Schwartz, a 17-year veteran of the schools, said everything she said was “indisputably true” and that some of her comments were taken out of context.

“I do remember saying, ‘Terrorism is unusual to us, but this is how everyday life is in Israel,'” Schwartz said.